Managing director with Thayer Ventures and a board member for companies such as ADARA, which provides travel intelligence solutions, Pillsbury spent much of his career with Marriott talks to Hospitality Sales and Marketing Association International (HSMAI).
His advice for hospitality marketing leaders responding to coronavirus is simple: You have to be straight with people.
Does this crisis remind you of any previous crises that you’ve experienced in your career in hospitality?
When I left Marriott and started my own company [Thayer Lodging Group, in 1991], the first property we bought was in Annapolis, Maryland, right down there at the Naval Academy. We bought it six weeks before the first Gulf War broke out, and all of a sudden, all traffic in Annapolis stopped. So, it looked very much like this. Hotel occupancies dropped to single digits. It was a very, very difficult period of time.
It went on for quite some time, for several months, and this little 132-room hotel ran up about a million dollars in trade payables. We had maybe $50,000 of cash after payroll and we had all these vendors, so we’d sit down — my wife and I and the controller— and we’d say, “Okay, give the bread guy $750.” My wife was the purchasing agent, and so she’d call the bread guy and say, “Hey, Dave, when you bring the bread order over Monday, stop by my office, I’ve got a check for you here.” And he’d say, “Well, how much is the check?” And she’d say, “Well, it’s $750. And he’d say, “Yeah, but you owe me $3,900 and you’re ordering $1,500 worth of bread.” And she’d say, “Dave, if you don’t bring me the bread I can’t give you this 750 bucks, and we really need you to work with us here. My husband and I have everything that we own in this business and we know what we’re doing. This will pass, we’ll get out of this, and we’ll make you whole.” Every single vendor stayed with us and continued to supply us even though our liability to them was getting bigger every week.
So, the lesson there is transparency, communication, honesty. It was an extraordinary lesson to learn in your first couple of months in business: What is the real nature of the problem here? We’ll figure it out, but tell me what you don’t want to tell me. Tell me what I don’t want to hear. After you’ve thought of all the things you’re going to tell me, then tell me what you didn’t put on the list and we can deal with it. The lesson that we learned in Annapolis is, you really have to be very straight with people. If you’re straight with people, they’ll respond and do the right thing.
How is coronavirus impacting your business?
I’m on Zoom meetings probably four or five hours a day with the boards of the companies that we’re involved with and with management teams who are trying to work through contingency plans. Many of our managers have never experienced anything like this and so they don’t know how to deal with it. It’s important that we spend time with them, talking about it and coaching them and helping them develop contingency plans and think through how to move ahead.
What are some of the mistakes you’re seeing hotel companies make in responding to coronavirus?
Not just hotel companies but travel companies in general — my personal hot button is companies trying to manage their cash flow on the backs of consumers who are losing their jobs and who are strained personally. These travel companies are trying to exploit them, take advantage of them, and have them provide a working capital for them to continue on paying their salaries to their headquarters staff.
The number-one example is cancellation policies. We have a trip planned and they’ve closed the border, we can’t get there, and so the [travel] company tells us, “Well, we’re going to allow you to cancel and you can rebook anytime in the next two years. And if you don’t use it, we’ll give you your money back in two years.” All they’re doing is trying to manage their cash flow at my expense. And I’ll remember that. For me, I’m a successful guy, I can survive. But for a lot of people who planned vacations, that is outrageous. I think it’s a disgraceful practice.
What is the role of hospitality marketing right now?
At this moment in time, marketing has a very important role internally in the organization. It has to speak up for the customer and make sure that its voice is not drowned out by the finance people sitting in the back office trying to figure out how to exploit the customers. This is a moment in time when marketing has to say, “Do the harder right, rather than the easier wrong.” This is hugely important, because marketing is the voice of the customer. It speaks to the customer out in the marketplace, but it speaks on behalf of the customer inside the organization, and marketing executives now need to stand up and be heard.
How far ahead should marketing people be looking in terms of planning their messaging?
Well, of course, the degree of uncertainty and the length of uncertainty is hard for any of us to deal with, because we’ve never experienced anything like this before. The financial crisis of 2008 and 9/11 were both for the most part crises on Wall Street. This is a crisis on Main Street. But there is a need for marketing people in particular to be looking as far down the road as possible. I think the best signals right now are coming out of ADARA’s COVID-19 market data, which they’re making available to everybody. It’s shown an uptick in Asia over the past week or so. [Editor’s note: HSMAI talked to Pillsbury on March 25.]
What other indicators are you looking at?
Obviously, the rate of new cases of COVID-19. The minute that peaks and the minute that starts to come down, that’s the signal that the worm has turned. People are pent up in their houses, so I think restaurant demand will come back first, leisure travel will come back ahead of individual business travel, and business travel will come ahead of group.
Are there any lessons that we can apply from previous crises such as 9/11 and the 2008 financial crisis?
The first lesson is, it’s almost impossible to overreact. We’ve seen that with COVID-19. If you went back to January and you saw this outbreak in China, you should’ve sold your airline stocks and all your travel industry stocks in general. We’re deep into it now, so as we start to recover, can you overreact? I don’t think so. Can you get too far out in front of it? I don’t think so.
There’s a level of cautiousness now. People have been burned, if you will, and are shell-shocked with the circumstances that we find ourselves in today. There may be a tendency to be slow on the uptake, to say, “Well, let’s wait until the phones start ringing before we tell the customers we’re open. Let’s watch the airlines fill up before we open the doors to our hotel. Let’s not staff, let’s not launch marketing efforts and campaigns until we are sure all of our guests have forgotten about this COVID stuff.” I think that would be a mistake. I think you will miss the opportunities in the same way that you missed the opportunity on the way down to cut your losses.
You can be too slow, and that’s the big risk — that you miss the recovery, that you get left on the sidelines. Whether you’re a restaurant chain, whether you’re a hotel brand, there will be a recovery. Customers are going to come back. The world is going to return, the sun is still going to come up tomorrow morning. And if you allow your competitors to reengage with the guests before you do, you’ll suffer.
For additional information, insights, and tools, visit HSMAI’s Global Coronavirus Resources page.